More like the 1% creates theories and the 99% have to test and simultaneously live with the results. Modern economics is all about squeezing something for as much revenue as possible before people move on to the next thing. Post modern economics will be about restoring balance.

It's pretty much obvious that forcing increasing aggregate demand (total spending in the economy) works only in the short run at the expense of the long run as the spending first and not production first can only happen through debt. And debt has an interest thingy that makes sure it cost us even more in the future.

So I'm pretty sure when Austrian's parrot collapse against Keynesian due to expansionary monetary policy it's pretty much because only expanding production rises quality of life (standard of living) and not expanding monetary base.

If Austrian's predicted that Keynesian policies would lower average standard of living they would be 100% correct because it always happened. They do somehow insist on grand collapse that does come more rarely.

Keynesian policies are popular due to volatility suppression effect they have as they cushion the negative market oscillations. And when you have politicians that have 4 year terms and people that need to eat and somewhere to sleep every day it's pretty obvious why reducing short term labor volatility is more important then losing on some long run expectancy (higher standard of living). The only problem is that interest rates force a higher penalty in the long run that usually is not met with higher production, so rolling debt to compensate for that deficit will inevitably trigger a collapse /default. Argentina is an nice example.

Never is a very long time.

Economists from both sides have predicted things incorrectly. So I guess you are suggesting there is empirical data that proves everyone is wrong sometimes. Which isn't news to anyone.

At this point it's pretty safe to say that they are significantly less accurate than broken clocks. In fact if they were to be correct at any significant moment I don't think we could rule out randomness statistically at this point.

At this point "Austrians" (the ideological constructs that rand types think Austrians were anyway), are probably good contrarian indicators.

Their record so bad it's almost certain the models are incorrect, or at best, incomplete.

But reasonable economists already knew that.

PS: Keynes and Friedman both would roll their eyes at much of what people say in their names.

The Austrians have gotten everything wrong about macroeconomics since the late 1800s. The primary reason they haven't gotten everything wrong for longer is that they didn't come about until the late 1800s.

This is, of course, why you should never buy a house using a mortgage. You should never leverage up a business model either!!!

Also, that damn highway system was the ruin of us! People cannot act as a collective, ever! Err, well it hasn't ruined us yet, but someday it surely will!!!

If the Flat Earth Society predicted that Obama would become president, they would be 100% correct. Not really sure why mentioning something that wasn't predicted is helpful here.

Also, Keynesians don't predict that standards of living won't drop during/following times of economic stress. That would just be silly. They predict that gov't fiscal and monetary policy can mitigate some of the effects of business cycles.

"You shouldn't take out a mortgage under any circumstances because taking one out a 440x loan to value mortgage with monthly payments of 783% of your monthly gross income is a bad idea."

Also, something something about geometric mean EV differing from arithmetic mean EV. (You aren't giving any EV up by smoothing things out)

I think you misunderstood.

I didn't put it on the extremes as to never ever do it. I did put it that on aggregate it won't work as production will lag the monetary expansion level if you push the demand side first through expanding monetary base. This has happened oh...every time! (did I say every time)

Since quality of life is production based, and monetary base expanding always incurs through debt, given the production lag the debt won't be serviced imposing a lower quality of life as a penalty. DUCY?

I think you misunderstood.

Keynesians don't predict that standards of living of the long run is lower due to their policies. On the contrary they do predict it should be higher as they will stimulate production witch will make the long run even better due to compounding from having production higher now then to wait 5 years of recession...

They firmly forget that the compounding also works on the monetary side they expanded and due to production lagging it is a slightly higher effect that will net out as a cost...

***
To put it bluntly, Keynesians use expanding monetary policy as a measure for downside volatility reduction. This has a cost. There is no way about it. Nevertheless it may very well be we should use it as it gives more short term stability in the labor market. It is still questionable if we are piling risk on the tail of the distribution and amplifying it through the same method. That is, are we paying the risk reduction (that I assume) or simply transferring it to the tail.

Similar of not letting small fires burn of forestry (small recession pruning of bad market behavior) just to impose a blazing inferno in the future.

Perhaps we should define understand if we are going to have a productive conversation about it.

There is a difference between understanding something and being able to predict all / most outcomes.

Economies, markets, etc. are complex systems. So by definition they are unpredictable. Small changes in input can have large changes in output. There is both positive and negative feedback, etc.

But that doesn't mean you can't understand economics in a general sense.

For instance, ceteris paribus, I can tell you that if you increase the supply one asset (hm, ... USD!) and keep the supply of another (hm, gold? for example) "constant" that the price of the later will go up in terms of the former.

Haha yes, that is true. It does not follow logically. And I am glad to hear you think this.

But it is my opinion, that despite something like Godel's Incompleteness theorem (which I think, for the same reasons can be applied to economics) that both math and economics are understandable.

Perhaps not completely definable. But, understandable.

Haha, if you take credit expansion and increased consumption to mean vindication then that is your own problem.

I think Keynesian's have enabled a misguided government to execute policy that would otherwise be out of their reach due to fiscal constraints. Or, perhaps you think Vietnam and Iraq were good things?

(Hahahahahahaha...the Keynesian's do. They marvel at the increased GPD post Katrina for example. But that is not vindication. Bridges to nowhere do not add value...)

Time is tricky and I wouldn't argue that people are bad at predicting. But you can't prove the positive and I think we are on horizon of a negative proof of Keynesian policy.


You keep saying this and my first reaction is always that you must be joking. I disagree with you here. I think the ME is a mess and a tinder box for global conflict. There are like are thousands of nukes aimed at targets all over the planet.

The world was much more stable immediately after WWII and immediately after the fall of the USSR. So long as there are nukes in the world and people are willing to use them you cannot (sanely) argue that the world is more stable than it was before the nuclear era.


Hahaha, careful now. You may have stepped on a land mine here. Ever heard of Adam Smith? Widely considered the first and perhaps greatest economist ever?

Well if you asked what he did he would say that he was a moral philosopher. There was no such thing as economics back then.

Morality was the guiding principle that informed his theories on specialization and trade. The reason that he believed in free markets, the invisible hand, and positive sum international trade was that he saw those pursuits as morally right and anything else as morally wrong.

Seriously, go read the book. It is called The Wealth of Nations.

This isn't about your (undisclosed) economic theory.

Haha, I disagree. Adam Smith did not measure and multiply to create his theories. I don't think von Mises did either. When discussing the economic calculus and and expanding on von Mises theory to predict and explain the failure of socialism I don't think Hayek did much empirical work.

There is plenty of logic in economics. You start with first principles, apply sound reasoning and most of it is rather obvious.



It is not all about data friend. I understand baseball but don't use Billy Bean's sabermetrics. Plenty of scouts still trust their judgement and reason.

The two approaches can peacefully co-exist. Just because old school scouts don't use Excel doesn't mean they are wrong.


Well first of all, even with out my second point, there could likely be social revolution in the west (US) if the status quo is maintained for decades. The wealth gap is a real problem and growing.

But, when the petro dollar falls, and it will (even if that is by way of oil becoming relatively obsolete); and when the USD loses its reserve currency status to the Yuan (a Yuan likely backed by gold and Russia)...and it will (predictions, but I think this is likely unless we elect politicians that have a clue...HAHAHA which is unlikely):

Then we will have serious problems that are currently beneath the surface will be in everyone's face. It will be like 1984 mixed with Atlas Shrugged mixed with the great depression mixed with the Great Gatsby.

***While I do think that the iceberg has hit the Titanic and that it is sinking, I don't think that it is too late (not technically).

But practically I am not very optimistic here because right the ship would require real change. It would require hard work, sacrifice, giving a ****, education, etc.

LOOOOOOL, the Austrians predicated the failure of Communism / Soviet Russia. Read Hayek's The Road to Serfdom.

Wow, very well said. Even eloquent. Taleb's The Black Swan of Cario expands on this.

Also, just for the fun of it, Nozick's Anarchy, State, and Utopia did not use empirical models. Nor did Thomas Hobbes, John Locke, or Jean Jacques Rousseau.

Their work flowed logically from a state of nature.

Freedom, morality, and property are all at the heart of both the American Constitution and economics.

(For TS and BTM, it was called the Enlightenment. Look it up. This era also included Adam Smith, and it was the ideas of the people mentioned here (except Nozick who came much later) that, when combined with the tyrannical actions of the British and French monarchies lead to the American and French revolutions. Which are now the foundations upon with most modern constitutions and democracies are built.)

// no more history lessons for now. I have things to do.

Do you ever think about how many predictions you're making? Your 1st paragraph is 3 predictions:
a. Social revolution in US
b. status quo in economic policy/system
c. wealth gap growing into a larger problem

Your 2nd paragraph is 5 predictions:
d. Petro dollar falls
e. oil becoming obsolete
f. usd loses reserve
g. yuan is made new reserve
h. yuan is backed by gold and russia.

8 predictions.

I am comfortable saying the petro dollar will not last forever.

I am comfortable with some of the other statements as well. But you are taking what I said out of context and are confusing a hypothetical with a prediction.

For instance, I said if the status quo is maintained.

And I didn't make a prediction about the wealth gap. I used the present tense. As in it is a problem, and it is growing.

You seem to be a native english speaker yet how have you butchered the language so hard. Like what point are you trying to make? That you can make a list of topics from my post?

Oil is currently becoming obsolete.

And just for good measure, TS basically asked for predictions / my opinion on the future (based upon the assumption that is system is about to blow up). A lot of what I said was conditional and hypothetical.

I don't know all the details and, therefore, I don't know if all of what you say is true and, therefore, can't comment on it. But assuming it is and assuming you are otherwise financially stable, rolling it into the inherited IRA will allow it to grow tax free and you'll pay tax as you take it out later. If you expect to be in a lower income tax bracket later, this will be beneficial. It may be beneficial anyway. If your plan for pulling it out would be to invest it, then pulling it out seems silly to me. You can invest it without pulling it out and in that case, as said, it can be done tax free until you do pull it out.

And you can get money out early. In certain situations, you can get it out penalty free. Other than those situations you can withdraw it early and pay the penalty.



If some event occurs that renders the USD and the Euro worthless or near worthless, I don't see how the BTC would be even close to relevant. And gold would probably be pretty much useless also.





My bad. I didn't realize the age of and, more importantly, the depth of this thread. I was initially just answering the IRA question.

Yeah, I think he meant when he said no one understands economics that he was talking about the ones who everyone listens to. The professional ones like these two guys lol. Government ones to. Here's two nobel prize winning economists who can't even dodge a question they should prepare for. The fun starts at 1:50

https://www.youtube.com/watch?v=mFdnA5UNmVw

Don't worry if you don't understand, plenty of people get it wrong....

Austrian Econ isn't exactly complicated.

Fair enough. In my defense, you're using some predictions to validate your assumption that it blows up. Also, your response count to TS is overwhelming and flooding the thread.

I don't want to argue with you on whether the wealth gap is growing or anything else you believe (I think if you measure the wealth spread out over the global population and account for the shrinking extreme poverty then the wealth gap is shrinking). And I don't want to argue about the yuan or dollar or oil.

So I made a list. Whatever. Anyway, you're right, I could be uninformed or simply be misreading you, but I feel you're unifying all your conditionals, assumptions, hypotheses, predictions and that's why you're comfortable. I was curious about how strongly you hold onto your beliefs, but I'm not anymore.

Yeah, I was just referring to domestic, US. But I don't really think the wealth gap is shrinking that much globally. But, the poorest of the poor do seem to be getting out of poverty.

Not sure if its so much because we are doing things right or its like nearly unavoidable given enough time.